2025-VIL-1012-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Business Auxiliary Service, Vague Show Cause Notice, Extended Period of Limitation – Appellant was paying certain amounts in foreign currency under the head "Other expenses" including salary to trainers from foreign companies - Department alleged that the appellant is liable to pay service tax on these charges under the category of "Business Auxiliary Service" from July 2003 onwards - hether the service tax can be levied on the "other expenses" including salary to trainers from foreign companies incurred in foreign currency under the category of Business Auxiliary Service on RCM basis – HELD - the SCN and the impugned order did not specify the sub-clause under Section 65(19) of the Finance Act, 1994 under which the services rendered by the appellant were being classified as Business Auxiliary Service. The failure to specify the sub-clause renders the notice invalid - Department itself was unsure of the nature of service as to the exact classification under the sub-clause was not done. Therefore, when the nature of service was not ascertainable by the Department while raising demand, the demand raised could not sustain - The Department failed to prove the taxability of the "other expenses" and did not establish the service provider-service recipient relationship. The appellant had provided the breakup of the "other expenses" which was not examined in detail by the lower authority. Therefore, the demand cannot be sustained – The impugned order is set aside and the appeal is allowed - Whether the extended period of limitation can be invoked in respect of the demand for the period from July 2003 to March 2008 – HELD - The extended period of limitation cannot be invoked in the present case as there was no positive act of suppression of facts by the appellant with an intent to evade payment of service tax. The appellant had recorded all the transactions in its books of accounts and regularly filed the ST-3 returns. The Tribunal relied on various precedents which held that mere omission or failure to declare the value of certain expenditure in the returns does not amount to suppression, and the extended period cannot be invoked in such cases. Therefore, the extended period of limitation was not justified in the present case.
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